NOTE AND LOAN AND SECURITY
                     AGREEMENT MODIFICATION AGREEMENT NO. 4

         This   Agreement   dated  this  18  day  of  October,   1995,   between
ENVIRONMENT-ONE  CORPORATION, a New York corporation with its principal place of
business  at P. O. Box 773,  2773  Balltown  Road,  Schenectady,  New York 12301
(hereinafter  called the  "Borrower"),  and FLEET  BANK f/k/a  FLEET BANK OF NEW
YORK,  a bank  organized  and  existing  under the laws of the State of New York
having its principal banking house located at 69 State Street,  Albany, New York
12207 (hereinafter called the "Lender").

                              W I T N E S S E T H:

         WHEREAS,  the  Borrower  did  execute and deliver to the Lender a Three
Million  and  no/100  Dollar  ($3,000,000.00)  Business  Promissory  Note  dated
December 30, 1992 (hereinafter called the "Note"); and

         WHEREAS, the Note was subject to the terms and conditions in a Loan and
Security  Agreement  also  dated  the 30th day of  December,  1992  between  the
Borrower and the Lender (hereinafter called the "Loan and Security  Agreement");
and

         WHEREAS,  the Note and the Loan and Security Agreement were modified by
the  parties  pursuant  to the terms of a Note and Loan and  Security  Agreement
Modification Agreement by and between the Borrower and the Lender dated the 23rd
day of March, 1994 (the "Modification Agreement"); and

         WHEREAS,  the Note and the Loan and Security Agreement were modified by
the  parties  pursuant  to the terms of a Note and Loan and  Security  Agreement
Modification  Agreement  No. 2 by and between the  Borrower and the Lender dated
the 20th day of March, 1995 (the "Modification Agreement No. 2"); and

         WHEREAS,  the Note and the Loan and Security Agreement were modified by
the  parties  pursuant  to the terms of a Note and Loan and  Security  Agreement
Modification  Agreement  No. 3 by and between the  Borrower and the Lender dated
the 30th day of March, 1995 (the "Modification Agreement No. 3"); and

         WHEREAS,  the Borrower and the Lender desire to further  modify certain
terms of the Note and the Loan and Security Agreement,  but only pursuant to the
terms and conditions of this Note and Loan and Security  Agreement  Modification
Agreement No. 4.

         NOW, THEREFORE,  in pursuance of said agreement and in consideration of
the mutual  promises,  covenants and agreements  herein contained and other good
and  valuable  consideration,  receipt of which is  acknowledged  by the parties
hereto, the Borrower and the Lender mutually agree and covenant as follows:


<PAGE>
         1. The  interest  rate set forth in the first  paragraph of the Note is
hereby modified as follows:

                  "The Borrower agrees to pay interest on the disbursed,  unpaid
         principal  from the  date  hereof,  computed  on a 360 day  basis,  but
         chargeable on actual days, at a per annum rate equal to 1.25% above the
         "Fleet Bank Prime Rate", adjusted as of the date said "Fleet Bank Prime
         Rate" is changed at the  Lender.  The "Fleet  Bank Prime  Rate" is that
         rate announced from time to time by the Lender as a reference point for
         determining  interest  rates  charged  on  certain  loans  and  is  not
         necessarily the lowest rate at which the Lender lends.  Upon receipt by
         the Lender of the Borrower's  internally prepared financial  statements
         for the period ending  September 30, 1995,  which financial  statements
         must evidence  Borrower's  compliance with all financial  covenants set
         forth  in  Schedule  A to that  certain  Loan  and  Security  Agreement
         executed by the  Borrower in favor of the Lender on December  30, 1992,
         as modified,  the interest rate chargeable  hereunder shall decrease to
         1.00% above the "Fleet Bank Prime  Rate",  adjusted as of the date said
         "Fleet Bank Prime Rate" is changed at the Lender.  Upon  receipt by the
         Lender of the Borrower's  audited  financial  statements for the period
         ending  December 31, 1995,  which  financial  statements  must evidence
         Borrower's  compliance  with  all  financial  covenants  set  forth  in
         Schedule A to that certain Loan and Security  Agreement executed by the
         Borrower in favor of the Lender on December 30, 1992, as modified,  the
         interest rate  chargeable  hereunder  shall  decrease to .75% above the
         "Fleet Bank Prime Rate", adjusted as of the date said "Fleet Bank Prime
         Rate" is changed at the Lender."

         2. Per  agreement  between the  Borrower  and the  Lender,  the advance
period for all Note draws  expired on December 31,  1994.  Pursuant to the terms
hereof,  as long as the Borrower is not in default  pursuant to the terms of the
Note and/or the Loan  Agreement,  as previously  modified,  the Lender agrees to
reopen the  advance  period for the  remaining  $329,086.91  left to be advanced
under the Note until June 30, 1996.

         3. Except as expressly modified hereunder, all the terms and conditions
of the Note, as previously  modified  pursuant to the terms of the  Modification
Agreement,  the Modification  Agreement No. 2 and Modification  Agreement No. 3,
remain in full force and effect,  with the  exception of the  modifications  set
forth in  paragraph  1  above.  All the  terms  and  conditions  of the Loan and
Security  Agreement,  as  previously  modified  pursuant  to  the  terms  of the
Modification  Agreement,  the  Modification  Agreement  No.  2 and  Modification
Agreement  No.  3,  shall  continue  to apply to the  Note as  further  modified
hereunder.

         4. The Borrower  hereby warrants and covenants to the Lender that as of
the  date  of  this  Agreement,  there  are  no  disputes,  offsets,  claims  or
counterclaims  of any kind or nature  whatsoever  under  the Note,  the Loan and
Security Agreement,  the Modification Agreement,  the Modification Agreement No.
2,  the  Modification  Agreement  No.  3 or  any of the  documents  executed  in
connection  therewith or herewith or the  obligations  represented  or evidenced
thereby or hereby.
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have executed this Note and Loan
and Security Agreement Modification Agreement No. 4 as of the 18 day of October,
1995.

FLEET BANK                                           ENVIRONMENT-ONE CORPORATION


By: /s/ Kevin P. Harrigan                      By: /s/ Angelo Dounoucos
   ----------------------                         ------------------------------
   Kevin P. Harrigan,                             Angelo Dounoucos, President
   Vice President                                 and Chief Executive Officer



                                               By: /s/ Philip Welsh
                                                   -----------------------------
                                                   Philip Welsh, Treasurer

STATE OF NEW YORK      )
                       ) ss.:
COUNTY OF Schencetady  )

         On this 18th day of October, 1995, before me personally appeared Angelo
Dounoucos,  to me known,  who being by me duly sworn, did depose and say that he
resides at 729 St.  Davids  Lane,  Schenectady,  New York 12309,  that he is the
President  and Chief  Executive  Officer  of  ENVIRONMENT-ONE  CORPORATION,  the
corporation  described in and which executed the above  instrument;  and that he
signed his name thereto by order of the Board of Directors of said corporation.

                                                              /s/ Carol J. Hicks
                                                              ------------------
                                                              Notary Public

                                                        CAROL J. HICKS          
                                               Notary Public, State of New York 
                                                         No. 5022470            
                                               Qualified in Schenectady County  
                                             Commission Expires January 10, 1996

STATE OF NEW YORK      )
                       ) ss.:
COUNTY OF Schenectady  )

         On this 18th day of October, 1995, before me personally appeared Philip
Welsh,  to me known,  who being by me duly  sworn,  did  depose  and say that he
resides at 13 Nottingham Way South, Clifton Park, New York 12065, that he is the
Treasurer of ENVIRONMENT-ONE CORPORATION, the corporation described in and which
executed the above  instrument;  and that he signed his name thereto by order of
the Board of Directors of said corporation.

                                                              /s/ Carol J. Hicks
                                                              ------------------
                                                              Notary Public

                                                        CAROL J. HICKS          
                                               Notary Public, State of New York 
                                                         No. 5022470            
                                               Qualified in Schenectady County  
                                             Commission Expires January 10, 1996
<PAGE>
STATE OF NEW YORK   )
                    ) ss.:
COUNTY OF Albany    )

         On this 16th day of October,  1995, before me personally appeared Kevin
P. Harrigan, to me known, who being by me duly sworn, did depose and say that he
resides  at 201  Autumn  Run,  Schenectady,  New York  12309,  that he is a Vice
President of FLEET BANK,  the  corporation  described in and which  executed the
above  instrument;  and that he signed his name thereto by order of the Board of
Directors of said corporation.

                                                         /s/ Oriana J. Farella
                                                         -----------------------
                                                         Notary Public

                                                      ORIANA J. FARELLA
                                               Notary Public, State of New York 
                                               Qualified in Schenectady County  
                                               Commission Expires April 3, 1997